Unions with generic parameter reduces parameter too far

Bug Report

When creating a method that takes a union of a type with a generic parameter it seems like the generic parameter is reduced to object instead of its original value.

To Reproduce

import typing as t

T = t.TypeVar('T', covariant=True)
Y = t.TypeVar('Y')


class Nothing(t.Generic[T]):
    def chain_none(self: 'Nothing[t.Optional[Y]]') -> 'Nothing[Y]':
        return self  # type: ignore


class Just(t.Generic[T]):
    def __init__(self, val: T) -> None:
        self._value = val

    def chain_none(
            self: 'Just[t.Optional[Y]]') -> t.Union[Nothing[Y], 'Just[Y]']:
        if self._value is None:
            return Nothing()
        return Just(self._value)


val: t.Union[Nothing[t.Union[None, int, str]], Just[t.Union[None, int, str]]]
reveal_type(val.chain_none())

This reveals 'Union[mypy_test.Nothing[builtins.object], mypy_test.Just[builtins.object]]' while I would expect 'Union[mypy_test.Nothing[Union[int, str]], mypy_test.Just[Union[int, str]]].

Please note that the example does work correctly when using Union[None, int] for val.

Your Environment

• Mypy version used: 0.790
• Python version used: 3.8.5

Run the supplied Python 3.8.5 reproduction with mypy 0.790 and compare the reveal_type output with the expected union. Trace the generic-parameter reduction for the union case, then add coverage showing that the result preserves Union[int, str] rather than reducing it to object.